BP expects £3.5bn income from alternative energy

BP promised yesterday to build the biggest alternative power business in the world, capable of producing $6bn (£3.5bn) worth of revenues per annum from projects in Britain and abroad within 10 years.

The move, revealed in the Guardian yesterday, came on the eve of an announcement by Tony Blair that he would launch a six-month energy review that many believe will open the door to a new generation of nuclear plants.

The world's second largest publicly quoted oil company said a period of experimentation with no or low carbon business was over and now was the time to invest $8bn by 2015 building wind farms, solar panels and hydrogen plants.

Chief executive Lord Browne dismissed suggestions that this was a public relations exercise designed to please the government and head off potential North Sea tax rises. "We are now at a point where we have sufficient new technologies and sound commercial opportunities within our reach to build a significant and sustainable business in alternative and renewable energy," he said.

The company is already proceeding with plans to build a wind farm at the Isle of Grain in Kent plus a hydrogen plant at Peterhead in Scotland.

The new business, BP Alternative Energy, will be based at Sunbury, Middlesex, and headed by a new boss, Steve Westwell, who will report to Vivienne Cox, the chief executive of BP's gas, power and renewables division.

Tony Juniper, director of Friends of the Earth, welcomed the BP move as a "step in the right direction" but relatively small scale given the oil company invested $15bn a year, nearly all on its hydrocarbon business. "We need the government to do more to back up these kinds of initiatives to really tackle climate change." The green group appealed to Mr Blair to support renewables more, cut energy waste and not "rubber stamp" a new generation of nuclear power stations.

The cross-government energy inquiry to be announced at the CBI annual conference is to be led by the Department of Trade and chaired by energy minister Malcolm Wicks. It is to be shadowed by the Sustainable Development Commission chaired by Jonathan Porritt. The commission will produce its report on nuclear early next year. There are fears that the government review could be biased towards the atomic sector, a charge rejected by Mr Wicks.

Previous energy reviews in 2002 and 2003 kept the door open to nuclear, but industry is looking for a clear signal that the goverment recognises that a new programme is necessary to replace ageing stations and meet climate change goals.

Shadow industry secretary David Willetts said that to "launch an energy review only now is testament to Labour's failure to tackle the problem a long time ago".